PART I [ITEM 3. KEY INFORMATION](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents key financial data for FY2020-2022, highlighting a significant net loss in 2022, and outlines extensive business and operational risks [Selected Financial Data](index=6&type=section&id=A.%20Selected%20Financial%20Data) The company reported a consolidated net loss of **$16.83 million** in FY2022, a reversal from prior net income, driven by decreased revenue and increased expenses Consolidated Statements of Operations Highlights (USD) | Indicator | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Revenues | 6,215,718 | 9,536,987 | 8,210,595 | | Cost of revenues | 6,458,162 | 4,909,704 | 2,190,768 | | Net Income (loss) | (16,832,101) | 778,037 | 3,423,542 | Consolidated Balance Sheet Highlights (USD) | Indicator | As of Oct 31, 2022 | As of Oct 31, 2021 | | :--- | :--- | :--- | | Total assets | 15,326,174 | 28,152,924 | | Total liabilities | 9,244,954 | 5,823,552 | | Shareholders' equity | 6,081,220 | 22,329,372 | Consolidated Cash Flow Highlights (USD) | Indicator | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (8,872,650) | (4,811,137) | 515,297 | | Net cash provided by (used in) investing activities | 236,884 | (1,485,306) | (26,288) | | Net cash provided by financing activities | 3,626,748 | 12,848,156 | (164,056) | - The company's Variable Interest Entity (VIE) structure was dissolved on January 20, 2023[23](index=23&type=chunk) [Risk Factors](index=9&type=section&id=D.%20Risk%20Factors) The company faces significant risks across its business, corporate structure, operations in China, and its publicly traded shares - Business risks include reliance on China's automotive industry, dependence on suppliers without long-term contracts, and various factors affecting NEV adoption like battery range, charging infrastructure, and government incentives[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - During the year ended October 31, 2022, the company wrote off **$2,942,315** in advances to suppliers who failed to deliver purchased vehicles[62](index=62&type=chunk) - The company is a holding company and relies on dividends from its PRC subsidiaries, which are subject to PRC laws restricting profit distribution, such as setting aside funds for a statutory reserve[69](index=69&type=chunk)[70](index=70&type=chunk) - The PRC government has significant oversight over the business, and recent regulations on overseas listings and data security (e.g., from CSRC and CAC) could impact the company's ability to offer securities and remain listed on U.S. exchanges[75](index=75&type=chunk)[110](index=110&type=chunk)[130](index=130&type=chunk) - The Holding Foreign Companies Accountable Act (HFCAA) poses a risk, where a future inability to inspect auditors could lead to delisting, despite PCAOB inspections in 2022[172](index=172&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - CEO Shuibo Zhang beneficially owns **33.10%** of the company's ordinary shares, giving him significant influence over corporate actions requiring shareholder approval[191](index=191&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=39&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Jiuzi Holdings Inc. operates NEV retail stores in China via franchising, generating revenue from sales and fees, and recently dissolved its VIE structure as part of a corporate restructuring [History and Development of the Company](index=39&type=section&id=A.%20History%20and%20development%20of%20the%20company) Jiuzi Holdings Inc., incorporated in the Cayman Islands, completed a major restructuring on January 20, 2023, dissolving its VIE structure - The company was incorporated in the Cayman Islands on October 10, 2019, and operates in China through its PRC Operating Subsidiaries[225](index=225&type=chunk) - On January 20, 2023, the company completed a restructuring that dissolved its VIE structure, resulting in its main operating entity, Zhejiang Jiuzi, becoming a wholly-owned subsidiary of Jiuzi WFOE[231](index=231&type=chunk)[233](index=233&type=chunk) [Business Overview](index=40&type=section&id=B.%20Business%20overview) The company franchises and operates "Jiuzi" branded NEV retail stores in China, with revenue from sales, initial fees, and royalties, focusing on network expansion - The company operates a franchise model for retail stores under the "Jiuzi" brand, selling NEVs in third- and fourth-tier cities in China, with **31** operating franchise stores and one company-owned store as of the report date[236](index=236&type=chunk) - Revenue streams consist of NEV sales, initial franchisee fees of RMB **4,000,000** (approx. **US$575,500**) per store, and ongoing royalties of **10%** of net income from franchisees[238](index=238&type=chunk) - The company sources NEVs from over twenty manufacturers, including BYD, Geely, and Chery, and partners with financing platforms to support franchisees and customers[240](index=240&type=chunk) - Key growth strategies include continued brand building and franchise expansion, converting traditional 4S stores into Jiuzi franchises, and developing an integrated online-offline technology platform for sales and services[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) [Organizational Structure](index=62&type=section&id=C.%20Organizational%20structure) Jiuzi Holdings Inc. is a Cayman Islands holding company operating through PRC subsidiaries, with its VIE structure dissolved on January 20, 2023 - The company is a Cayman Islands holding company operating through PRC subsidiaries, with the VIE structure dissolved on January 20, 2023[376](index=376&type=chunk)[388](index=388&type=chunk) - The corporate structure flows from Jiuzi Holdings Inc. (Cayman) -> Jiuzi HK (Hong Kong) -> Jiuzi WFOE (PRC) -> Zhejiang Jiuzi (PRC Operating Company) and its subsidiaries[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk) [Property, Plants and Equipment](index=63&type=section&id=D.%20Property,%20plants%20and%20equipment) The company's principal office is leased in Hangzhou, China, with its company-owned Shangli Jiuzi store also leased in Jiangxi Province - The principal executive office is leased in Hangzhou, China, with a lease expiring on July 31, 2026[391](index=391&type=chunk) - The company-owned Shangli Jiuzi store is leased in Pingxiang City, China, with the lease expiring in February 2023[392](index=392&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=63&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) For FY2022, Jiuzi Holdings reported a net loss of **$16.83 million**, driven by decreased revenue and surging operating expenses, leading to weakened liquidity and going concern doubts Consolidated Results of Operations (FY 2022 vs. FY 2021) | Financial Metric | FY 2022 (USD) | FY 2021 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 6,215,718 | 9,536,987 | (34.83)% | | Gross Profit (Loss) | (242,444) | 4,627,283 | (105.24)% | | Selling, General & Admin Expenses | 6,692,049 | 2,983,582 | 124.30% | | Provision for credit loss | 7,267,026 | 309,024 | 2,251.61% | | Write-offs of advances | 2,942,315 | - | N/A | | Net Income (Loss) | (16,832,101) | 778,037 | (2,263.41)% | - The decrease in total net revenue was mainly due to a **96.49%** drop in franchise initial fees, from **$8.09 million** in 2021 to **$0.28 million** in 2022, attributed to the re-outbreak of the pandemic in China[407](index=407&type=chunk)[410](index=410&type=chunk) - NEV sales revenue increased by **309.19%** to **$5.91 million** in FY2022 from **$1.44 million** in FY2021, driven by an increase in franchisee sales[407](index=407&type=chunk)[408](index=408&type=chunk) - The company wrote off **$2,942,315** in advances to suppliers due to their failure to deliver purchased vehicles, with civil claims filed against these vendors[416](index=416&type=chunk) Summary of Cash Flows (FY 2022 vs. FY 2021) | Cash Flow Activity | FY 2022 (USD) | FY 2021 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | (8,872,650) | (4,811,137) | | Net cash provided by (used in) investing activities | 236,884 | (1,485,306) | | Net cash provided by financing activities | 3,626,748 | 12,848,156 | [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=73&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is led by CEO Shuibo Zhang and CFO Francis Zhang, with a five-member board including three independent directors, and has established equity incentive plans - The board of directors consists of five members, including three independent directors: Richard Chen (Chair of Audit Committee), Junjun Ge (Chair of Compensation Committee), and Jehn Min Lim (Chair of Nomination Committee)[466](index=466&type=chunk)[493](index=493&type=chunk) Executive Compensation Summary (USD) | Name and Principal Position | Fiscal Year | Salary ($) | Total ($) | | :--- | :--- | :--- | :--- | | Shuibo Zhang, CEO | 2022 | 306,751 | 306,751 | | | 2021 | 17,335 | 17,335 | | Francis Zhang, CFO | 2022 | 120,000 | 120,000 | | | 2021 | 17,335 | 17,335 | - The company has adopted three equity incentive plans: the 2021 Plan (**1,000,000** shares), the 2022 Plan (**2,000,000** shares), and the 2023 Plan (**1,200,000** shares), with **1,000,000** shares awarded under the 2021 Plan and **700,000** under the 2023 Plan as of the report date[483](index=483&type=chunk)[484](index=484&type=chunk) - As of the date of the report, the company had **33** full-time employees, with **55%** in Marketing and Sales[505](index=505&type=chunk) - CEO Shuibo Zhang beneficially owns **11,925,000** ordinary shares, representing **33.10%** of the issued and outstanding shares[508](index=508&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=80&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's relationships and transactions with related parties, primarily franchisees, including significant loans receivable and contract liabilities - The company's franchisees are considered related parties due to a nominal equity interest (**1.25%**) held by the company, which is for business name registration purposes and does not confer control[511](index=511&type=chunk) Key Related Party Balances (USD) | Account | Oct 31, 2022 | Oct 31, 2021 | | :--- | :--- | :--- | | Accounts receivable from related franchisees | 214,946 | 529,407 | | Loans to related franchisees, net | 8,292,630 | 13,810,550 | | Accounts payable to related franchisees | 6,986 | 44,366 | | Contract liability – related party | 976,484 | 164,804 | - As of October 31, 2022, the company had outstanding receivables of **$13,556** from CEO Shuibo Zhang and **$22,922** from VP of Marketing Qi Zhang for business purposes[524](index=524&type=chunk)[525](index=525&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=85&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section refers to the consolidated financial statements and outlines the company's dividend policy, which is to retain earnings for expansion, with future dividends subject to PRC regulations - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain earnings to finance business expansion[530](index=530&type=chunk) - As a holding company, its ability to pay dividends depends on receiving funds from its PRC subsidiaries, which are subject to PRC regulations, including statutory reserve requirements and controls on currency conversion and remittance[532](index=532&type=chunk)[533](index=533&type=chunk)[534](index=534&type=chunk) [ITEM 9. THE OFFER AND LISTING](index=86&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's ordinary shares have been listed and trading on the Nasdaq Capital Market under the ticker symbol "JZXN" since May 18, 2021 - The company's ordinary shares are listed on the Nasdaq Capital Market under the symbol "JZXN" since May 18, 2021[540](index=540&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=86&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's share capital history, including its IPO and convertible debenture, summarizes its articles of association, and discusses PRC exchange controls and various tax implications - On May 20, 2021, the company completed its initial public offering, selling **5,200,000** ordinary shares at **$5.00** per share and receiving net proceeds of approximately **$22 million**[546](index=546&type=chunk) - In December 2021, the company entered into an agreement for a convertible debenture with a principal amount of up to **$2.5 million**[548](index=548&type=chunk) - The company's memorandum and articles of association are governed by Cayman Islands law, which does not obligate the company to hold annual general meetings[551](index=551&type=chunk)[582](index=582&type=chunk) - The company discusses the risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which depends on the composition of its income and assets and could have adverse tax consequences for U.S. holders[645](index=645&type=chunk)[646](index=646&type=chunk) PART II [ITEM 15. CONTROLS AND PROCEDURES](index=104&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) As of October 31, 2022, management concluded that the company's disclosure controls and procedures were ineffective due to a material weakness, with remediation plans underway - Management concluded that as of October 31, 2022, the company's disclosure controls and procedures were ineffective[673](index=673&type=chunk) - A material weakness was identified in internal control over financial reporting due to the company not having sufficient accounting and finance personnel with U.S. GAAP experience[673](index=673&type=chunk) - The company plans to hire additional personnel with experience in U.S. GAAP financial reporting and control procedures to remediate the material weakness[673](index=673&type=chunk) [ITEM 16. CORPORATE GOVERNANCE AND ACCOUNTANT INFORMATION](index=104&type=section&id=ITEM%2016.%20CORPORATE%20GOVERNANCE%20AND%20ACCOUNTANT%20INFORMATION) This section covers corporate governance, including the audit committee financial expert, Code of Conduct, independent auditor WWC, P.C., and adherence to Cayman Islands governance practices - The Board of Directors has determined that Richard Chen qualifies as an "audit committee financial expert"[675](index=675&type=chunk) Principal Accountant Fees (WWC, P.C.) | Fee Category | FY 2022 (USD) | FY 2021 (USD) | | :--- | :--- | :--- | | Audit Fees | 265,000 | 200,000 | | Audit-Related Fees | 0 | 0 | | Tax Fees | 0 | 0 | | All Other Fees | 0 | 0 | - As a foreign private issuer, the company is permitted to follow Cayman Islands corporate governance practices, which may differ from Nasdaq listing standards[687](index=687&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=107&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The consolidated financial statements for FY2020-2022, prepared under U.S. GAAP, include an auditor's emphasis on going concern due to accumulated deficit, detailing the company's financial position and results [Report of Independent Registered Public Accounting Firm](index=108&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor, WWC, P.C., issued an unmodified opinion on the financial statements but highlighted substantial doubt about the company's ability to continue as a going concern due to its accumulated deficit - The auditor's report contains an "Emphasis of Matter" paragraph regarding the company's ability to continue as a going concern, citing its accumulated deficit[700](index=700&type=chunk) [Consolidated Financial Statements](index=109&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a significant deterioration in financial health for FY2022, with total assets declining, liabilities rising, a net loss of **$16.8 million**, and increased cash used in operations Consolidated Balance Sheet (USD) | Account | Oct 31, 2022 | Oct 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | 12,248,396 | 22,220,204 | | **Total Assets** | 15,326,174 | 28,152,924 | | **Total Current Liabilities** | 8,334,530 | 4,022,280 | | **Total Liabilities** | 9,244,954 | 5,823,552 | | **Total Stockholders' Equity** | 6,081,220 | 22,329,372 | Consolidated Statement of Income (USD) | Account | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Total Revenues | 6,215,718 | 9,536,987 | | Gross Profit (Loss) | (242,444) | 4,627,283 | | Operating Income (Loss) | (17,151,253) | 1,317,135 | | Net Income (Loss) | (16,832,101) | 778,037 | [Notes to the Financial Statements](index=113&type=section&id=Notes%20to%20the%20Financial%20Statements) The notes detail the company's organization, accounting policies, and VIE dissolution, noting going concern uncertainty due to accumulated deficit, significant credit loss provisions, and related-party transactions - The financial statements were prepared assuming the company will continue as a going concern, but an accumulated deficit of **$9.3 million** as of October 31, 2022, raises substantial doubt about this ability[745](index=745&type=chunk) - The company's VIE structure, which was in place for the reporting periods, was dissolved on January 20, 2023, after the fiscal year-end[882](index=882&type=chunk) - The allowance for credit losses on loans to franchisees increased significantly to **$7.3 million** in FY2022 from **$0.8 million** in FY2021, due to aging balances and adverse market conditions[816](index=816&type=chunk) - In December 2021 and January 2022, the company issued convertible debentures, with an outstanding balance of **$2.84 million** as of October 31, 2022[855](index=855&type=chunk)[857](index=857&type=chunk) - The company has filed civil claims against certain vendors for failing to deliver vehicles and has written off **$2.75 million** in advances paid to these suppliers as of October 31, 2022[883](index=883&type=chunk)[884](index=884&type=chunk)